After months of gloom, the Hang Seng Index (HSI) has finally reclaimed the 20,000 mark — a psychological milestone many thought would take much longer to reach. For investors who held on through the turbulence, this is more than just a number — it's a symbol of renewed confidence in China's equity markets. But now comes the billion-dollar question: which China stocks will lead the next leg of this rally?

The Sentiment Shift

The sentiment toward China stocks has shifted sharply. A mix of stronger-than-expected economic data, signs of policy support from Beijing, and a softening global rate environment has helped lift investor spirits. For once, the narrative has turned from “China is uninvestable” to “China might just surprise us.”

Tech Titans Reawakening?

Alibaba, Tencent, Meituan — the big names that once led the charge are slowly regaining investor favor. While these tech giants are still trading far below their previous highs, the combination of low valuations, buybacks, and stabilizing regulatory conditions are painting a brighter outlook.

If the tech recovery has legs, expect Tencent to benefit from steady gaming revenues and a strong ecosystem. Alibaba might also stage a comeback, especially if its restructuring plans translate into leaner, more focused operations. JD.com and Baidu could also join the rally as investors start rotating into oversold names.

Consumer and Retail Rebound

As domestic consumption picks up, Li Ning, Anta Sports, and Haier Smart Home are also stocks to watch. The Chinese consumer is cautious, but with improving confidence, there may be a wave of pent-up demand ready to be unleashed.

E-commerce platforms like Pinduoduo (via its US listing) and Meituan could see increased activity as consumers become more willing to spend. In particular, companies targeting lower-tier cities — where spending has remained relatively resilient — may lead the way.

The Clean Energy Push

EVs and clean energy remain long-term plays. While short-term sentiment has been choppy, BYD, CATL, and LONGi Green Energy continue to attract investors focused on sustainability and future-proof sectors. As the global narrative around green transition strengthens, China's dominance in this space could become a tailwind.

Financials and Property: Cautious Optimism

Banks and insurance firms like ICBC and Ping An Insurance are still trading at cheap valuations, but questions around asset quality remain. However, if the property market finds stability, there may be more upside ahead. Don't be surprised if China Resources Land or Vanke start climbing as sentiment improves.

Time to Position?

The HSI crossing 20,000 could mark the start of a broader rerating. Institutional money that stayed on the sidelines may now begin to trickle back in. Retail investors, too, are starting to take notice — not just in Hong Kong but globally.

Of course, risks remain: geopolitical tensions, property sector instability, and the ever-watchful eye of regulators. But with valuations still low compared to historical averages and other global markets, the risk-reward profile for China stocks may finally be tilting in favor of the bulls.

Final Take

The HSI reclaiming 20,000 is more than a headline — it's a signal. If the recovery holds, the next leaders could be the very names that were once written off. Whether you choose tech, consumer, EVs, or even property — one thing’s clear: China stocks are waking up, and the next chapter could be one of growth, not gloom.